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REGULATIONS UNDER CONSULTATION
CMF submits regulations on related parties’ transactions standards for public consultation
On July 10, 2023, the Financial Market Commission (“CMF”) invited the different actors of the financial market to participate in the public consultation process that will be carried out from that date until August 4, 2023, on the regulatory proposal that establishes the minimum mentions that should be included in the policies of regular operations and that regulates the public disclosure of related party transactions (hereinafter, “RPOs”) that have been carried out by open and special corporations (the “Regulatory Proposal”).
This, based on Law No. 21.314 of April 2021, which amended several legal bodies in order to strengthen confidence in the financial markets and introduced amendments to Law No. 18. 046 of the Corporations Law (“LSA”) regarding RPOs, particularly by virtue of the provisions of Article 147 of the LSA, granting powers to the CMF to establish by general rule the minimum conditions to which the policy of usual operations must refer and, in turn, to require open and special corporations to disclose the details of the operations with related parties that have been carried out.
The purpose of the Proposed Regulation is to raise the standards of the RPOs, in order to improve the criteria that the entities will take into consideration for the purpose of considering certain operations as habitual and ordinary in consideration of the company’s line of business, and also to make transparent which operations have been carried out within the framework of the policy of habitual operations and which outside of it.
The proposal establishes that the standard operating policies of publicly traded companies must include as a minimum:
1. Date of approval of the policy by the board of directors and date of the last modification to it.
2. Justification of the need to have a policy of habitual operations considering the particular case of the company.
3. Characteristics and conditions to be met by the transactions in order to be carried out under the regularity policy, indicating the counterparties with which the transactions will be carried out, the nature of each type of transaction considered regular, other restrictions determined by the Board of Directors and the maximum amount per transaction.
4. Characteristics of the transactions that may not be considered ordinary by virtue of the regularity policy.
5. Control mechanisms to which the transactions intended to be carried out or that have been carried out under the policy shall be subject.
6. Responsible for compliance with the control mechanisms indicated by the policy.
7. Disclosure mechanisms.
Regarding the dissemination of information, the proposal establishes that companies must prepare a quarterly report of all transactions made with related parties and disseminate it on their website.
In addition, all transactions carried out under the regularity policy, the knowledge of which is relevant to the investment decisions of the shareholders or the general public, must be disclosed by means of a material fact.
The Proposed Regulations establish that the provisions will become effective from the six-month period following the issuance date, so that the companies will have a period of 6 months to comply with the regulations.
As of that date, the customary policies that do not comply with the provisions of the regulations will cease to have effect, and therefore, in order to remain in effect, they must be adjusted and approved by the board of directors before that date.
Financial Market Commission publishes Implementation and Supervision Guide for Section 8.2 of General Rule No. 461, regarding ESG disclosures.
On October 4, 2022, the Financial Market Commission (“CMF”) announced the publication of the “Guidelines for Implementation and Supervision of Section 8.2 of General Rule No. 461” (the “Guidelines”).
The publication of the Guide is part of the issuance, in November 2021, of General Rule No. 461 (“NCG 461”), which incorporated numeral 2.1.C.8.2 to Section II of General Rule No. 30 (“NCG 30”).
The NCG 461 is a pioneer standard at international level, being the first of its kind to force audited entities to disclose information based on the Standards of the Sustainable Accounting Standards Board (“SASB Standards”), which aim to measure and report ESG factors (environmental, social and governance) for more than 75 industry sectors, in addition to establishing how they are measured and reported.
The Guide establishes general principles with which obligated entities must comply in order to implement the SASB Standards in their annual reports:
1. Reports should present relevant, specific and complete information.
2. The reports should be clear and easy to understand; and
3. Reports should be consistent over time.
Furthermore, the Guidelines indicate parameters and standardize specific criteria for better compliance with NCG 461.
In effect, the Guide provides guidance on the content of the annual report of the obligated entities and the way in which the board of directors of the obligated entity selects the economic or industrial sector under which it must report in accordance with the SASB Standards.
The Guide also explains the best practices in relation to the consideration that a disclosure parameter is not applicable or requires adaptation. In fact, it indicates how the information should be disclosed in the event that entities carry out activities in more than one industrial or economic sector.
The Guide is an informative and complementary document to Section II of GCN 30, which aims to provide guidance on the SASB Standards, and the best practices expected by the FMC for compliance with the aforementioned standard. In no case does the Guide condition the enforceability of GCGA 30, since the entities must fully comply with the requirements of said standard, including the obligation to disclose the SASB Standards. Therefore, the Guide provides guidance on how to comply with these obligations.
Financial Market Commission issues instructions to send information on articles 26 bis, 38 bis and 80 bis of the Single Fund Law.
On September 22, 2022, the Board of the Financial Market Commission approved the public consultation of the regulatory proposal that provides instructions regarding the form, conditions and terms in which the General Fund Administrators (“AGF”) must submit to the Financial Market Commission (“CMF”) information regarding the provisions of articles 26 bis, 38 bis and 80 bis of the Single Fund Law.
Pursuant to articles 26 bis, 38 bis and 80 bis of the Single Fund Law, the AGFs shall annually submit to the CMF the following:
(i) Information regarding mutual or investment fund shares of deceased unitholders.
a) Identification data of the deceased participant.
In case the 10-year term referred to in Article 38 bis of the Single Fund Law has expired:
b) Quotas redeemed. (identification of the fund(s) and series whose quotas were redeemed, number of quotas redeemed for each fund or series as the case may be, total amount corresponding to the set of quotas redeemed and date of redemption).
c) Amounts delivered to the Chilean National Fire Brigades Board.
ii) Information regarding dividends and other uncollected cash benefits.
In the event that the 5-year term referred to in Article 80 bis of the Single Fund Law has expired:
a) Identification data of the unitholder.
b) Identification of the fund.
c) Amounts delivered to the Chilean National Board of Firefighter Corps.
iii) Updated list of dividends agreed to be paid and uncollected values.
a) Updated list of dividends agreed to be paid.
b) Updated list of dividends and other uncollected benefits.
iv) Information regarding uncollected mutual or investment fund monies as of the liquidation of the fund.
In case the 5-year term referred to in Article 26 bis of the Single Fund Law has expired:
a) Fund identification data and date of fund liquidation.
b) Amounts delivered to the National Board of Fire Departments of Chile.
The information to be submitted under the regulatory proposal must be sent to the CMF during the month of March of each year, through the Online Information Sending System (“SEIL”), according to the instructions contained in the Technical Sheet available on the CMF’s website. The information to be submitted in March of each year must refer to the information corresponding to the immediately preceding calendar year, i.e., from January 1 to December 31 of each year.
The aforementioned regulatory proposal indicates that, in accordance with the provisions of Article 18 of the Single Fund Law, the AGFs must truthfully, sufficiently and timely inform the participants of the mutual or investment funds, as the case may be: (i) the fact that they will proceed with the redemption of quotas referred to in Article 38 bis of the Single Fund Law, as well as the fact that they will proceed with the delivery of such monies to the National Board of Firefighters of Chile; ii) the fact that uncollected dividends and other cash benefits referred to in Article 80 bis of the Single Fund Law will be delivered to such Board; and iii) the fact that uncollected mutual or investment fund monies from the liquidation of funds will be delivered to such National Board, in accordance with the provisions of Article 26 bis of the Single Fund Law.
With regards to the validity, the instructions of the regulatory proposal would become effective as from the date of its enactment, without prejudice to the provisions of the transitory article of Law 21. 433, according to which articles 38 bis and 80 bis are also applicable prior to the entry into force of the law in those cases indicated, so that the corresponding information obligations referred to in letters b) and c) of numeral i) and numeral ii) of Section I of the regulatory proposal will only come into force one year after the publication of Law 21,433.
In turn, the AGFs shall adjust their internal regulations in order to comply with the provisions of Articles 26 bis, 38 bis and 80 bis of the Single Fund Law in the next amendment and deposit made in the Public Registry of Deposit of Internal Regulations kept by this Service.
REGULATIONS UNDER CONSULTATION Financial Market Commission submits to public consultation rules on information submission
On July 25, 2022, the Financial Market Commission issued exempt resolution No. 4691, which approves the submission for consultation of the general regulation requiring the submission of information on fraud in accordance with the new Article 11 of Law No. 20.009 (the “Resolution 4691”); and exempt resolution No. 4697, which approves the submission for consultation of the regulation amending general regulations No. 30, No. 303, No. 473 and No. 475, in the terms indicated (the “Resolution 4697”). Such public consultations will last for three weeks as from their publication.
The regulations put out for consultation under Resolution 4691 seek to standardize the manner in which banking entities; credit support companies; companies whose business consists of issuing credit cards, cards with provision of funds or any other general system; and savings and credit cooperatives that issue and operate credit cards for their members and/or means of payment with provision of funds, comply with the obligation set forth in the new Article 11 of Law 20. 009, regarding the publication of aggregated information on the number of people affected by fraud in payment cards and electronic transactions, including the amounts involved, the terms of response or compliance with the obligations, and to send such information -disaggregated- to the Commission.
On the other hand, the regulations put in consultation under Resolution 4697 are intended to simplify the registration processes in the Securities Registry kept by the Commission and the ongoing reporting obligations of issuers of securities and reporting entities.
In particular, this project makes the necessary amendments to general rules No. 30 and No. 303 in order to complete the implementation of the automated system for debt securities placements.
Some amendments to these regulations are included in the draft regulations, the purpose of which is that certain information related to the issuance of debt securities be reported as an essential fact -i.e., the fact that a placement of securities was made and the average placement rate of these securities-.
In addition, amendments are made to General Regulation No. 473 in order that the fact that an open stock corporation has opted to join the simplified regime of continuous reporting obligations is communicated to the public as essential information.
Likewise, an amendment to general regulation No. 475 is included, which specifies the continuous information obligations that public companies and housing leasing companies will have, in relation to the provisions of section II of general regulation No. 30 and its amendments -as applicable by virtue of their type of company-.
On July 25, 2022, the Financial Market Commission issued General Rule No. 480 (the “NCG 480”), which regulates the interconnection of stock exchanges.
Pursuant to NCG 480, and in accordance with the provisions of Article 44 bis of Law 18.045 of the Securities Market Law, the stock exchanges must implement a real-time interconnection mechanism between the automatic matching modalities of the systems called “Telepregón” of the Santiago Stock Exchange and “Pregón” of the Chilean Electronic Stock Exchange (Bolsa Electrónica de Chile).
The purpose of this is that the best bid in force in any of the automatic matching systems of these exchanges is matched before the other bids in force in these systems. In the event of equal prices, the bid that was previously entered in any of these systems shall always be matched.
Notwithstanding the foregoing, the following shall not be included within the interconnection obligation: (i) simultaneous operations; (ii) forward operations; and (iii) orders whose individual amount exceeds 30,000 UF, in which the best execution is only achieved by executing the operation outside the inter-exchange system.
In effect, only those orders of more than 30,000 UF in which the client himself directly enters his order in the system of the corresponding stock exchange, opting not to submit to the interconnected system and those orders in which the client, for the execution of his order of more than 30,000 UF, instructs the broker not to submit to the interconnected system, as well as the broker’s own portfolio order whose purpose is to acquire or dispose of the instruments of said client, will be included in the assumption of paragraph (iii) above.
Except for the exceptions indicated above, brokers must warn their clients of the impossibility for an offer to be executed only in a certain stock exchange center, given the binding nature of the interconnection.
In addition, NCG 480 establishes the conditions to be met by the interconnection mechanism and the technical, communication and security requirements to be met by the mechanism, the exchanges and their participants.
Among these conditions, it is important to highlight that no stock exchange, unilaterally or by mutual agreement, may establish any requirement or condition to the brokers of other exchanges for their offers to be communicated and marked through the interconnection system. Neither may the exchange where the inter-exchange order was matched make any charge to the broker of another exchange for such matching. In turn, the exchanges may not charge their brokers for the fact of contracting the terminals of another exchange and entering their orders through them. This is without prejudice to the charges that the stock exchange may make to its brokers for the entry of bids directly through its own terminals and for the complementary services provided by the stock exchange by virtue of contracts entered into between the parties.
The instructions set forth in NCG 480 are effective as of July 25, 2022, the date of issuance of the regulation. Notwithstanding the foregoing, the stock exchanges, within 2 months from that date, shall agree on the common standard for real-time messaging between stock exchanges. In addition, they will have a period of 4 months as of such date to adapt their regulations and submit them to the Commission for approval. For the purposes of the design, development and implementation of the interconnection mechanism, they will have 9 months from that date. Notwithstanding the foregoing, as from the sixth month of said term, the system tests shall be carried out, so that its implementation is carried out within a maximum term of 12 months as from the date of issuance of the regulation.
NCG NO. 467 Financial Market Commission (Comisión para el Mercado Financiero) regulates the authorization process for the existence of special stock corporations, which states the following:
On March 31, 2022, General Rule No. 467 (the “NCG 467”) was issued, which regulates the authorization process for the existence of special corporations.
According to NCG 467, any entity required by law to request authorization of existence before the Commission, with the exception of banks, non-bank payment card issuing companies, payment card operating companies, companies administering clearing and settlement systems for financial instruments and insurance companies, must request its authorization of existence by one or more of the future partners of the company, who will be responsible for the accuracy and completeness of the information provided to the Commission.
Among the information required by NCG 467 are the following:
a) Digitalized copy of the public deed containing the bylaws of the future entity.
b) Regarding natural persons who directly or indirectly contribute 10% or more of the capital stock: full name, national identity card, passport or other official identification document, and indication of the total percentage of the capital that they will directly or indirectly own of the company.
c) Regarding the legal entities that directly participate in the incorporation of the company: (i) Identification: Company name, type of company, unique tax number and legal domicile; (ii) Identification of the legal representative: Full name and national identity card, passport or equivalent; (iii) Copy of the public deed of incorporation and certificate of good standing of the company and marginal annotations not older than 5 days, except in the case of companies created under the protection of Law No. 20. 659; and (iv) In the event that the powers of representation are not contained in the accompanying bylaws, a copy of the instrument conferring such powers must be attached.
f) Information on the persons who will be appointed as provisional or definitive directors of the corporation.
g)) Brief description of the company’s history.
h) Ownership structure of the corporate group to which the company will belong.
i) Summary of the strategic plan (mission, vision and objectives) and of the company’s business plan.
j) Background information that allows accrediting that the partners have the necessary liquid resources to comply with the capital contribution commitments.
k) Sworn statement by the person signing the application that the copies attached are a true reflection of the originals.
Then, NCG 467 states that after reviewing the background and correcting any observations made by the Commission, the resolution authorizing the existence of the entity and the issuance of the corresponding special certificate will be issued without any further procedure, upon payment of the corresponding fees for existence authorization.
Notwithstanding the foregoing, it is clarified that such authorization of existence does not enable the entity to start its operations or functions when this requires special authorization from the Commission.
Additionally, it regulates the situation in which the information referred to in letters a) to d) of the NCG is modified, indicating that the Commission must be notified of such event within 5 working days of its occurrence through the SEIL module. In the case of the information referred to in letter e), it must be communicated by the same means no later than the business day following the occurrence of the respective circumstance.
Finally, in order to comply with Article 126 of Law No. 18.046, the entity, as soon as it has made the registration in the Commercial Registry of the registered office and the corresponding publication in the Official Gazette, must communicate this fact to the Commission through the SEIL module, attaching a copy of the respective registration and publication.
NCG NO. 468 Financial Market Commission regulates the authorization process for the commencement of operations of general fund managers.
On March 31, 2022, the Financial Market Commission (“CMF” or “Commission”) issued General Rule No. 468 (the “NCG 468”) which regulates the authorization process for the start-up of general fund managers.
According to NCG 468, the authorization to start operations may be carried out together with the authorization of existence, or after such authorization has been granted, without the fund managers being able to start their operations, that is, to deposit the first internal regulations of any mutual or investment fund in the deposit maintained for such purpose by the Commission, without having been granted both the corresponding authorization of existence and the authorization to start operations by means of a founded resolution issued by the CMF.
The same regulation establishes the necessary requirements for the purposes of requesting the authorization to commence operations, and an application must be made together with the following documents:
a) Outline containing the estimated organizational and functional structure, with a brief description of the functions of each unit and identification of the Committees that will support the management of the manager and of the persons or units in charge of the risk management, internal audit and compliance functions.
b) Initial version of the Security and Information Management Policies.
c) Initial version of the Risk Management and Internal Control Manual.
d) Initial version of the Manual for the Prevention of Money Laundering, Bribery or Financing of Terrorism.
e) Document containing a brief general description of the main information or support systems for the relevant processes of the fund manager, with an indication of those for information security.
f) Initial version of the entity’s risk matrix, grouped according to the business cycles contemplated in Section III of Instruction No. 1,869 of 2008, with an indication of the probability of risk materialization and estimated impact before and after the strategic responses adopted by the entity.
g) Identification of the areas or services that the entity considers will be outsourced, indicating the counterparties, in the event that the respective contracts have been entered into, and the safeguards that will be adopted to ensure that such outsourcing does not affect the normal operation of the fund manager, the protection of client information and does not generate circumstances that may result in an inadequate resolution of conflicts of interest.
h) Initial version of the Business Continuity Plan, for which it is recommended to use the template and instructions for the preparation of plans for non-governmental entities of the Federal Emergency Management Agency of the United States Department of Homeland Security (FEMA), or the Methodology for the Preparation of the Operational Continuity Plan issued by the National Emergency Office of the Ministry of the Interior and Public Security (ONEMI).
Finally, the regulation states that once the background information has been reviewed and any observations made by the Commission have been corrected, the resolution authorizing the commencement of operations will be issued without further procedure, and from that moment on, the fund manager may begin to deposit regulations of the funds in the respective depository.
Amends Law No. 20.712, on the Administration of Third-Party Funds and Individual Portfolios, in relation to the destination of uncollected funds by the participants of mutual or investment funds, or by their assignees, for the benefit of the Chilean Fire Department. Law N° 21.433
On March 18, 2022, Law No. 21.433 (the “Law”) was published in the Official Gazette amending Law No. 20.712 on the Administration of Third-Party Funds and Individual Portfolios, in relation to the destination of monies not collected in a timely manner by the participants of mutual or investment funds, or by their beneficiaries, for the benefit of the Chilean Fire Department.
The Law includes two new articles:
1. Art. 38 bis, which establishes that the quotas of mutual or investment funds that have not been registered in the name of the respective heirs or legatees within 10 years from the death of the respective participant, will be redeemed by the fund administrator and must be delivered to the National Board of Fire Departments of Chile.
In order to comply with the above, the fund managers must inform the Financial Market Commission in March of each year, the date of death of the participants, the quotas redeemed, and the amounts delivered to the National Board of Firemen of Chile in the previous year.
The Law also adds that the provisions of this article shall also apply to those mutual or investment fund shares whose participants have died prior to the entry into force of the Law.
2. Art. 80 bis, which establishes that dividends and other benefits not collected by the respective participants within five years from the payment date determined by the respective investment fund manager must be delivered to the National Board of Firefighters of Chile.
It also adds that, in order to comply with the above, the fund manager must keep such resources in adjustable term deposits after one year has elapsed since the monies have not been collected by the respective participants. The fund managers must inform the Financial Market Commission, in March of each year, of the dividends and other cash benefits paid to the National Board of Firefighters of Chile, as well as an updated list of the dividends agreed to be paid to the participants with their respective dates and the amounts not collected in each fund at the end of the previous year.
Finally, the Law also adds that the provisions of Article 80 bis will also be applicable to those dividends and other cash benefits which payment dates established by the fund managers are prior to the entry into force of the Law.
Financial Market Commission issues Bulletin No. 2.297, which introduces a new Chapter 12-16 on the limit on loans granted to business groups.
On November 2 of this year, the Financial Market Commission approved the issuance of Bulletin No. 2.297, which provides new instructions to banks regarding the limit of credits granted to corporate groups referred to in paragraph seven of Article 84 N°1 of the General Banking Law that affect individual debtors and interbank credits, for the determination and control of which banking companies must observe the instructions contained in Chapter 12-3 of the Updated Compilation of Rules for Banks (“RAN”).
Through the aforementioned Bulletin, Chapter 12-16 was incorporated to the RAN, which establishes the scope and exceptions for the application of the credit limit to corporate groups, together with the way to form the lists of corporate groups, the entities that compose them and the way to compute the credits granted to entities belonging to the same corporate group, in order to determine their degree of credit concentration and compliance with the limit.
Furthermore, the above, a new file D60, called “Transactions with entities belonging to the same corporate group”, is incorporated to the Information System Manual, with which the audited entities will report monthly the information referred to the daily transactions carried out with entities belonging to the same corporate group. This in addition to identifying the groups to which they belong and the amounts owed. This new file must be sent from January 2022 onwards. In addition, the regulation considers a period of adaptation to the modification, by means of which, exceptionally, the sending of the files referring to the months of January to April 2022 will be made in June, together with the file corresponding to the month of May.
Law No. 21.374 Ministry of Finance Amends Law No. 20.712, on the Administration of Third Party Funds and Individual Portfolios, in relation to the destination of certain amounts of money for the benefit of Chilean Fire Departments.
On September 28, Law No. 21.374 (the “Law”) was published in the Official Gazette, which amends Law No. 20.712 on the administration of third party funds and individual portfolios, in relation to the destination of certain funds to the Chilean Fire Department.
The Law includes a new art. 26 bis, which establishes that the money of the funds (whether mutual or investment funds), not collected by the respective participants for a period of 5 years from the liquidation of the corresponding fund, must be delivered to the National Board of Firefighter Corps of Chile.
In addition, it adds that in order to comply with the above, the fund administrator must maintain such resources in time deposits with indexed interest rates after 1 year has elapsed since the funds have not been collected by the respective participants.
Finally, the Law also adds that the money corresponding to dividends, capital distributions and any other cash benefits that have not been collected by the respective participants of the funds liquidated more than 5 years after the entry into force of this law, may be delivered to the National Board of Firefighters of Chile, indicating the procedure for this purpose.
On July 19, 2021, the Financial Market Commission (hereinafter, the “CMF”) published General Rule No. 457 (hereinafter, the “NCG”), which simplifies the issuance of publicly offered securities. The NCG amends General Rule No. 30 (hereinafter “NCG 30”) in order to facilitate the registration of issuers and public offering securities in the Securities Registry of the CMF; and General Rule No. 303 (hereinafter “NCG 303”) of the CMF, simplifying the content of applications for registration of securitization debt securities and their registration in the Securities Registry of the CMF.
1. Main amendments to NCG 30.
i. Regarding the information required from entities registered in the Securities Registry:
(a) The date of publication and disclosure of financial statements by issuers of securities must be disclosed at least 30 days in advance, through their website and through the CMF’s System for Sending Information Online (SEIL).
(b) Open stock corporations must publish the notice of shareholders’ meetings no less than 10 days in advance.
ii. The issuance of publicly offered securities is simplified:
(a) The requirement to send prospectuses prior to their disclosure is eliminated, notwithstanding that their format and content must conform to the minimums established by the CMF.
(b) The requirement to submit to the CMF the facsimiles of the materialized securities and the security certificate of the printing company, the contracts with the securities depository company in case of dematerialized securities, the background information evidencing the quality of the qualified experts and the mnemonic code of the security is eliminated.
(c) The obligation to submit the information required for the registration of public offering securities in duplicate is eliminated.
2. Main amendments to NCG 303.
Several modifications are introduced to the procedures to be followed by securitization companies for the issuance of securitized debt securities and their registration in the Securities Registry, in order to simplify them and homologate them to the bond registration process contained in NCG 30. To this effect, the content of the applications for registration of securitization debt securities is simplified, eliminating certain requirements and obligations.
3. Amendments to the Updated Compilation of Norms (RAN).
To this effect, it states that in order to register in the Securities Registry an issue of bonds other than subordinated and perpetual bonds, the entity must follow the procedure set forth in Section IV of NCG 30.
The provisions contained in the NCG became effective on July 19, 2021.
General Rule No. 452: exempts from the obligation to register certain public offerings of securities and amends General Rule No. 336 of 2012.
On February 22, 2021, the Financial Market Commission (hereinafter, the “CMF”) published General Rule No. 452 (hereinafter, the “NCG 452”), which exempts certain public offerings of securities from the obligation to register the issuer or security and amends General Rule No. 336 of 2012 (hereinafter, the “NCG 336”). It also repeals General Rule No. 345 and paragraphs 1 and 2 of Circular No. 125.
The instructions established by virtue of NCG 452 will become effective as of the same date of the issuance of the rule.
1. Excepted public offerings
i. Those whose securities may only be acquired by qualified investors.
ii. Those made in national stock exchanges, provided that the total accumulated amount to be raised by the issuer or offeror in the 12 months following the first offer made in the stock exchange does not exceed the equivalent of 100,000 Unidades de Fomento, and that the offeror or the issuer complies with the information requirements that the respective stock exchange has established for the protection of investors in order to make the corresponding offer.
iii. Those that establish as a requirement to improve each operation, that the investor acquires at least 2% of the capital stock of the issuer of the securities.
iv. Those whose purpose is to compensate the employees of the issuer of the securities, or of its parent company, subsidiaries or affiliates, regardless of whether the offer relates to the shares of a collective investment vehicle whose main investment are instruments representing the capital of the former.
1. Those that deal with securities that confer to their purchasers the right to membership, use or enjoyment of the facilities or infrastructure of educational, sports or recreational establishments.
2. Amendments to NCG 336
The following amendments were made to NCG 336:
i. A new paragraph c) is added to number iii) of section I, indicating that public offerings of securities shall not constitute public offerings of securities that are directed to a maximum of 50 investors that do not have the status of Qualified Investor, as long as the copulative requirements of section I indicated in numbers i) and ii) are also met.
ii. The final paragraph of section I is modified in relation to the fact that securities offerings that deal with instruments whose unit value amounts to at least 3,000 Unidades de Fomento shall not be required to comply with the alternative requirements indicated in number iii) of section I of NCG 336.
iii. If the communication or material that is delivered to potential investors is in a language other than Spanish or English, the information must also be included in one of these two languages.
iv. Section IV, paragraph (a) is replaced, indicating that in order to verify the identity and quality of Qualified Investor of the persons indicated in letters (a) and (b) of paragraph (iii) of Section I of NCG 336, a declaration may be obtained from the person acquiring the securities offered, indicating what type of investor he/she is, that is, qualified from 1) to 6) of section II of General Standard No. 216 of 2008, 7) or 8) of the same standard, or that he/she is not a Qualified Investor, and the fact that he/she is aware that the securities to be acquired are not registered in the registers kept by the CMF.
3. Obligations to inform the public
– Those who make the offers indicated in number 1. above, must indicate, in the verbal, physical or electronic communication used to offer the securities, that the offer deals with securities not registered in the registers kept by the CMF and that, therefore, the offer may not be made to the public in Chile:
– No public offering can be made in Chile of such securities; and.
In the event that the issuer of the securities is not registered, such issuer will not be subject to the supervision of the CMF, nor will it be obliged to comply with the continuous information obligations required of registered issuers.
4. Information obligations to the CMF
The offerors of the respective securities must send to the CMF, 5 business days prior to the day on which the offer is intended to be made, the following information:
i. Identification of the Offeror.
ii. Identification of the Issuer of the Security.
iii. Identification of the entity for which the workers perform functions (if applicable).
iv. Type of offer to be made.
v. Total amount intended to be placed with the recipients of the offer, expressed in Chilean pesos as of the day prior to the day the information is sent.
vi. Percentage of the issuer’s capital (if applicable).
Additionally, the offeror must attach to this information a declaration of truthfulness of the same and of the fact that he/she will comply with the instructions given in these regulations.
General Rule No. 451: establishes characteristics or conditions to be complied with in order to register debt securities under the automatic registration modality.
On January 25, 2020, the Financial Market Commission (hereinafter, the “CMF”) published General Rule No. 451 (hereinafter, “NCG 451”), which establishes the conditions and procedure to be complied with to register debt securities (bonds, securitized bonds, convertible bonds, bills of exchange, and in general short or long term debt securities) under the automatic registration mode.
1. Conditions to register debt securities under the Automatic Registration modality.
Debt securities may be registered in the Securities Registry by means of the aforementioned modality, complying with the following conditions:
i. That the registration of the issuer in the Registry is in force on the day of the deposit of the issue whose registration is requested; and
ii. The registration of the issuer has been in force uninterruptedly during the 12 months prior to that date.
In the case of mutual funds and investment funds supervised by the CMF, it will be sufficient that at the time the application is made, it has the minimum net worth and number of participants required by Article 5 of Law 20,712.
Likewise, NCG 451 establishes that the automatic registration modality may not be used by issuers or administrators that, at the date of the application:
i. Have been charged with a possible violation of Article 65 of the Securities Market Law (hereinafter, the “LMV”), while the sanctioning procedure is pending resolution;
ii. That a sanctioning resolution has been issued by the CMF in accordance with the provisions of Article 65 of the LMV, unless three years or more have passed; or
iii. Those who have not yet sent their financial statements (in accordance with applicable regulations).
2. Procedure to be followed to make the registration:
Certain background information must be provided through the SEIL Module – Online Information Sending System – in accordance with the instructions contained in the Technical Sheet provided for such purposes on the CMF’s website.
Once the application for registration has been submitted, and after the applicant has made the corresponding declarations in accordance with the regulations issued by the CMF, the latter will proceed with the registration of the debt securities in the Securities Registry, issuing the corresponding certificate, after payment by the applicant of the registration fees.
The NCG 451 indicates that the instructions of this regulation are effective as of January 25, 2021. However, it adds that for those registration applications pending resolution by the CMF, the issuer must formally request the CMF to cancel them, and after the said request is accepted by means of an official letter from the CMF to that effect, the registration application must be reinstated.
Commission for the financial market gives instructions regarding the technological means authorized for the holding of board meetings.
On November 17, 2020, the Comisión para el Mercado Financiero (“CMF”) published the General Rule N°450 (“NCG 450”), which gives instructions regarding the technological means authorized to hold board meetings and revokes the circular N°1.530 of 2001 of the CMF. In this respect, NCG 450 mainly regulates the following aspects:
1. Authorized technological means: any system of bidirectional transmission and reception of sounds, images or information, which allows the interaction of the directors in real time, simultaneously and permanently.
2. Duties of the board of directors, the general manager and the company:
a) Companies must have at least one system that allows directors to exercise their right to attend board meetings remotely, which must be at no cost to them. For the purposes of the place where the meeting is held, the registered office is understood to be both the legal address of the company and the virtual one, composed of the different systems and means made available by the company.
b) The general manager or the secretary of the board of directors, if the function has been delegated to him, must communicate to each director, with due notice, the form and schedules in which the systems will be available, and must also provide them with the information and documentation that the directors need to deliberate and define the matters to be dealt with at the meeting.
c) It is the responsibility of the president, or whoever acts as president, and the secretary of the board of directors, to record in the minutes the certification of the following:
c.1. That the remote assistance system or systems are enabled, allowing all directors to attend and participate, as well as being connected during the entire session simultaneously and permanently; and
c.2. The identity of those who used such system(s) to participate in the session
d) The deliberations and agreements of each session must be recorded in minutes stored on physical or digital media, which guarantee their fidelity and integrity, and which must be signed (physically or by electronic signature) by all the directors who attended the session, by means of mechanisms that provide certainty regarding the authenticity of the signatures of those directors